By BURGETTA EPLIN WHEELER
The News & Observer
N.C. Budget Director Lee Roberts met with editorial and newsroom folks this week to talk about Gov. Pat McCrory’s budget proposal. Here are my NOT VERBATIM notes and video of his addressing the concerns of taxpayers who believe they’re paying more.
I’m not foolhardy enough to try to predict what the General Assembly is going to do (with Gov. Pat McCrory’s budget proposal). We have had a very good dialogue with them. I did work with them closely. I came in without the same kind of pre-existing relationships of my predecessors had. I tried to build those relationships. Hopefully that makes for a process that works in everybody’s best interest.
Q: What’s the biggest difference in doing a government budget as opposed to a private one?
ROBERTS: There are a couple of significant differences. There is much more attention and focus on every aspect of the budget. Every part of the budget has a constituency, people around the state paying attention to it, which translates into attention from the General Assembly. Every component also implicates a large well-staffed government department. The whole process is more complex from that perspective. Two other significant differences are one, without a profit motive there is a lot more different layers of policy required in a budget. For example, most agencies don’t pay rent to the state if it’s a state-owned building. Accordingly, there’s not a built-in incentive to use space effectively. We have offices, budget offices that are empty, piled up with old binders, some piled up with old furniture. You see that wherever you go around state government. If there were a mechanism in place to charge agencies rent, to be accountable for space used, we might see more efficient use of space. That’s not a problem you have to solve in the private sector. Anyone with profit motive already has those incentives.
The third thing that’s unique to government budgeting, I’ve never come across anything like Medicaid before, the complexity and the lack of predictability. There’s a range on the Medicaid forecast, five different forecasts, and they add up to plus or minus swinging $300 million on each side. I’ve never come across that kind of variance in the private sector.
(As for Medicaid expansion) we need to learn more about what it entails. We don’t know the financial impact of expansion. We don’t know the financial impact of what we have now. The governor has been clear he’s interested in exploring expansion, but it has to be right for North Carolina and we have to understand what it entails in terms of financial commitment we’d be taking on.
The Supreme Court, in June when we get a decision, that will affect the shape of Medicaid. Shouldn’t we wait and see what the Supreme Court has to say?
Q: What are we losing economically in terms of money and jobs by not expanding?
ROBERTS: We are not receiving federal dollars we would have to match, though not right away. The federal match in existing Medicaid now costs 18 percent of the overall budget. It’s easily the most unpredictable part of the budget.
Just because federal dollars are available, as long as you have a state match associated with it, we have a responsibility to understand what that liability is.
We are responsible for understanding the overall impact on the state’s economy, the impact on providers of the existing system and all the rules changes just come through routinely, and on reform or expansion it requires understanding what it means for providers and patients and everybody else. We hear a lot from all those interest groups.
Q: You’ve proposed two bond issues, one for transportation and one for infrastructure. Which is more important?
ROBERTS: They are formally not in the budget. It requires separate legislation. But we view them as tied to overall economic policy. One focuses on transportation and one on general infrastructure needs. Those are needs across the state. They will be between $1.2 and $1.4 billion each. We chose those sizes based on the debt affordability report. Nobody wants to do anything to jeopardize our bond ratings, not even to raise the question. We’re not going to do anything to cause the bond market to raise an eyebrow. But we have a very strong balance sheet. We’re one of only 10 states that have AAA ratings from all three agencies. Our debt service metrics are better than average for those 10 states and gives us the ability to finance on a long-term basis. If we can borrow at historically low rates money for 20 years for infrastructure that lasts 50 years …
Q: Where is that $82 million on salaries going? It’s not across the board. Will the cafeteria workers in state government get a raise?
ROBERTS: DOT knows it’s having trouble keeping a certain type of engineer, and the same is true for certain IT jobs. In other areas we’re trying to identify the most effective employees and keep them. This new employee management system will make a huge difference.
And anybody who doesn’t think those cafeteria workers aren’t integral to running the legislative building doesn’t know anything. That’s ground zero.